Gender ISA gap: a THIRD more men invest than women

Written by Lori Campbell on 8th Mar 2023

A third more men invest in Stocks and Shares ISAs than women, according to new data, but there ARE reasons for hope.

The latest figures from HMRC show that women hold 52 per cent of all ISAs – but most are choosing the safe haven of cash over stocks and shares. In the 2019/20 tax year, 1.57 million men took out a Stocks and Shares ISA compared with only 1.16 million women. Meanwhile, around 5.03 million women opened a Cash ISA, compared with 4.12 million men.

Newer data from Hargreaves Lansdown (HL) reveals that 62 per cent of people who hold a Stocks and Shares ISA on their platform are men. However, while HMRC data shows that women had an average of £1,991 less in their ISAs than men in 2019/20, the average balance in a Stocks and Shares ISA with HL is HIGHER among women than men.

Sarah Coles, Head of Personal Finance at Hargreaves Lansdown said: “There’s a stark gender ISA gap, with men far more likely to hold Stocks and Shares ISAs than women. It means that despite women holding more ISAs overall, because they’re focused on cash, men stand a better chance of beating inflation over the long term.

“Where women overcome the barriers to investing, however, HL data shows that they adopt sensible long-term investment strategies, and hold more than men.”

Indeed, a growing body of research shows that when women do invest, they actually perform better than men. 

Men hold more Stocks and Shares ISAs AND have more in their ISAs

The gender ISA gap owes much to the fact that women are more likely to save, and men to invest.

There are some instances when cash is the right home for your money, particularly if you’re likely to need to spend it within the next five years. However, with inflation still in double-digits, it means Cash ISA savers have lost spending power after inflation. In the coming year, as it falls back, they stand a better chance of keeping pace, but over the long term of five to 10 years or more, stock market investments tend to be much more likely to beat inflation than cash.

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Women generally have less spending power

Women’s reluctance to invest owes a great deal to the fact that on average they earn less than men, and the more you earn, the more likely you are to have an investment ISA. It tends to reach a tipping point when our income reaches £30,000: before then we’re more likely to have a Cash ISA, and after that we’re more likely to favour stocks and shares.

Women also tend to have less secure incomes, because they’re more likely to have breaks in their career for caring responsibilities or work part time and face a drop in income. It means some may feel they cannot face the risk involved with investment.

There’s no denying that there is risk involved, but the way we tend to assess long-term risk is faulty. We feel losses more keenly, so women can over-estimate the risk that investments will lose money over the long term. They may also underestimate the risk their cash ISA will lose value after inflation.

There are reasons for optimism

There is real hope, because women who invest are building impressive investment portfolios. Among HL ISA clients, women who have taken the plunge and invested in ISAs hold more on average in them than men. Women hold an average of £54,615 and men an average of £52,203 (figures exclude JISAs and LISAs).

They’re also likely to have adopted a sensible get-rich-slow strategy, holding around three quarters of  their ISA assets in funds – while men hold closer to two thirds. Funds are less likely to shoot the lights out than individual shares in any given year, but by spreading the risk over a number of different investments, they help diversify the risk.

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